The Lesser-Known Risks of Crypto Mining Stocks
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When it comes to mining Bitcoin, crypto mining stocks immediately come to mind given how often they appear on headlines. Droves of miners operate behind the scenes to confirm transactions that have pushed Bitcoin to nearly $900 billion in value (as of mid-September). They are an essential piece of blockchain consensus, creating new bitcoins from scratch by solving complex cryptographic puzzles and verifying transactions on the blockchain.
Commodities like oil and gold have upstream and downstream components, which start at the beginning of the extraction process and end downstream with refined products. Trading and investing in Bitcoin mining companies is similar to investing in upstream commodity markets.
The companies behind Bitcoin mining stocks either offer crypto mining hardware, or mine the cryptocurrencies themselves.